UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

xT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2007

¨£ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  333-108057

COMMONWEALTH INCOME & GROWTH FUND V
(Exact name of registrant as specified in its charter)

Pennsylvania65-1189593
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)

Brandywine Bldg. One, Suite 200
2 Christy Drive
Chadds Ford, PA 19317
(Address, including zip code, of principal executive offices)

(610) 594-9600
(Registrant’s telephone number including area code)


Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (ii) has been subject to such filing requirements for the past 90 days:  YES  xT  NO  ¨£

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, (as definedor a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12c-212b-2 of the Act)Exchange Act (Check one): YES  ¨ NO   x

Large accelerated filer  £
Accelerated filer  £
Non-accelerated filer T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     YES  ¨£  NO  xT
 

1

FOFORM 10-QRM 10-Q
MARCH 31,JUNE 30, 2007

TABLE OF CONTENTS

 PART I 
Item 1.
Condensed Financial Statements
3
Item 2.
Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations
1112
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
1316
Item 4.
Controls and Procedures
13
16
 PART II 
Item 1.
Legal Proceedings
1417
Item 1A.1 A.
Risk Factors
1417
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
1517
Item 3.
Defaults Upon Senior Securities
1517
Item 4.
SumissionSubmission of Matters to a Vote of Securities Holders
1517
Item 5.
Other Information
1517
Item 6.
Index to Exhibits
15
17
 
Signatures
18
 Certifications 


Commonwealth Income & Growth Fund V    Part I. FINANCIAL INFORMATION
Condensed Balance SheetItem 1. Financial Statements

Commonwealth Income & Growth Fund V
 
Condensed Balance Sheet
 
  
  
June 30,
  December 31, 
  
2007
  2006 
  
(unaudited)
    
Assets
   
    
Cash and cash equivalents $3,923,760  $7,071,792 
Lease income receivable, net of reserves of $0 as of  June 30, 2007 and December 31, 2006  109,025   202,493 
Other receivable – Affiliates  136,816   58,578 
Prepaid Fees  10,868   4,670 
   
4,180,469
   7,337,533 
    
Computer equipment, at cost  20,978,068   15,195,877 
Accumulated depreciation  (5,289,126)  (2,949,031)
   
15,688,942
   12,246,846 
    
Equipment acquisition costs and deferred expenses, net  594,844   474,586 
Prepaid acquisition fees  247,936   376,996 
   
842,780
   851,582 
    
Total Assets
 $
20, 712,191
  $20,435,961 
    
Liabilities and Partners' Capital
   
    
Liabilities
   
Accounts payable $341,570  $177,550 
Accounts payable - General Partner  63,462   56,762 
Other accrued expenses  -   38,446 
Unearned lease income  237,960   151,248 
Notes Payable  3,744,165   2,320,496 
Total liabilities
  
4,387,157
   2,744,502 
    
Partners' Capital
   
General partner  1,000   1,000 
Limited partners  16,324,034   17,690,459 
Total Partners' Capital
  
16,325,034
   17,691,459 
    
Total Liabilities and Partners' Capital
 $
20,712,191
  $20,435,961 
  
March 31,
  
December 31,
 
  
2007
  
2006
 
  
(unaudited)
    
Assets
      
       
Cash and cash equivalents $6,838,687  $7,071,792 
Lease income receivable, net of reserves of $0 as of  March 31, 2007 and December 31, 2006  77,533   202,493 
Other receivable – Affiliates  61,996   58,578 
Prepaid Fees  18,837   4,670 
   
6,997,053
   7,337,533 
         
Computer equipment, at cost  16,657,458   15,195,877 
Accumulated depreciation  (3,988,259)  (2,949,031)
   
12,669,199
   12,246,846 
         
Equipment acquisition costs and deferred expenses, net  479,874   474,586 
Prepaid acquisition fees  344,899   376,996 
   
824,773
   851,582 
         
Total Assets
 $
20,491,025
  $20,435,961 
         
Liabilities and Partners' Capital
        
         
Liabilities
        
Accounts payable $190,457  $177,550 
Accounts payable - General Partner  10,099   56,762 
Other accrued expenses  458,263   38,446 
Unearned lease income  225,276   151,248 
Notes Payable  2,569,021   2,320,496 
Total liabilities
  
3,453,116
   2,744,502 
         
Partners' Capital
        
General partner  1,000   1,000 
Limited partners  17,036,909   17,690,459 
Total Partners' Capital
  
17,037,909
   17,691,459 
         
Total Liabilities and Partners' Capital
 $
20,491,025
  $20,435,961 

see accompanying notes to condensed financial statements


Commonwealth Income & Growth Fund V
Condensed Statements of Operations
Commonwealth Income & Growth Fund V
 
Condensed Statement of Operations
 
          
          
  
Three months Ended
 June 30,
  
Six months Ended
 June 30,
 
  
2007
  
2006
  
2007
  
2006
 
  
(unaudited)
  
(unaudited)
 
Income
            
Lease $1,737,452  $762,116  $3,115,734  $1,366,704 
Interest and other  46,808   118,198   121,289   167,623 
Total income
  
1,784,260
   880,314   
3,237,023
   1,534,327 
                 
Expenses
                
Operating  369,762   257,596   655,984   612,086 
Organizational costs  -   -   -   36,751 
Equipment management fee - General Partner  86,873   41,848   155,787   72,077 
Interest  40,676   20.885   68,739   37,057 
Depreciation  1,300,867   587,678   2,340,095   1,027,417 
Amortization of equipment acquisition costs and deferred expenses  74,345   33,041   133,260   57,436 
Loss on sale of equipment  38   -   38   - 
Miscellaneous  -   230   -   230 
Total expenses
  
1,872,561
   941,278   
3,353,903
   1,843,054 
                 
Net (loss)
 $(88,301) $(60,963) $(116,880) $(308,729)
                 
Net (loss) allocated to limited partners
 $(94,547) $(65,730) $(129,376) $(319,974)
                 
Net (loss) per equivalent limited  partnership unit
 $(0.08) $(0.05) $(0.10) $(0.26)
                 
Weighted average number of equivalent limited partnership units outstanding during the period
  
1,249,951
   1,249,951   
1,249,951
   1,249,951 

  
Three months Ended
 
  
March 31,
 
  
2007
  
2006
 
  
(unaudited)
 
       
Income
      
Lease $1,378,282  $604,587 
Interest and other  74,481   49,425 
Total income
  1,452,763   654,012 
         
Expenses
        
Operating  286,222   354,490 
Organizational costs  -   36,751 
Equipment management fee - General Partner  68,914   30,229 
Interest  28,062   16,173 
Depreciation  1,039,228   439,739 
Amortization of equipment  acquisition costs and deferred expenses  58,913   24,396 
Total expenses
  1,481,339   901,778 
         
Net (loss)
 $(28,576) $(247,766)
         
Net (loss) allocated to limited partners
 $(34,826) $(254,244)
         
Net (loss) per equivalent limited  partnership unit
 $(0.03) $(0.22)
         
Weighted average number of equivalent limited  partnership units outstanding during the period
  
1,249,951
   1,130,000 

see accompanying notes to condensed financial statements


Commonwealth income & Growth Fund V
Commonwealth income & Growth Fund V
 
Condensed Statements of Partners’ Capital
 
For the Six Months ended June 30, 2007
 
(unaudited)
 
  
  
  
General
  
Limited
          
  
Partner
  
Partner
  
General
  
Limited
    
  
Units
  
Units
  
Partner
  
Partners
  
Total
 
                
Balance, January 1, 2007
  
50
   
1,249,951
  $
1,000
  $
17,690,459
  $
17,691,459
 
                     
Net income (loss)  -   -   12,496   (129,376)  (116,880)
Distributions  -   -   (12,496)  (1,237,049)  (1,249,545)
                     
Balance, June 30, 2007
  
50
   
1,249,951
  $
1,000
  $
16,324,034
  $
16,325,034
 
Condensed Statements of Partners’ Capital
For the Three Months ended March 31, 2007
(unaudited)


  
General
  
Limited
          
  
Partner
  
Partner
  
General
  
Limited
    
  
Units
  
Units
  
Partner
  
Partners
  
Total
 
                
Balance, January 1, 2007
  
50
   
1,249,951
  $
1,000
  $
17,690,459
  $
17,691,459
 
                     
Net income (loss)  —   —   6,250   (34,826)  (28,576)
Distributions  —   —   (6,250)  (618,724)  (624,974)
                     
Balance, March 31, 2007
  
50
   
1,249,951
  $
1,000
  $
17,036,909
  $
17,037,909
 

see accompanying notes to condensed financial statements


Commonwealth Income & Growth Fund V
Condensed Statements of Cash Flow

Commonwealth Income & Growth Fund V
Commonwealth Income & Growth Fund V
 
Condensed Statements of Cash Flow
Condensed Statements of Cash Flow
 
 
Three months Ended
   
 
March 31,
  
Six months Ended
 
 
2007
  
2006
  
June 30,
 
 
(unaudited)
  
2007
  
2006
 
       
(unaudited)
 
            
Net cash provided by operating activities
 $
1,311,737
  $466,239  $
1,788,248
  $727,396 
                
Capital expenditures  (887,764)  (2,034,556)  (3,563,021)  (3,589,483)
Prepaid acquisition fees  32,097   (99,608)  129,060   (47,459)
Net proceeds from sale of computer equipment  744   - 
Equipment acquisition fees paid to General Partner  (58,463)  (95,209)  (231,319)  (194,550)
Net cash (used in) investing activities
  (914,130)  (2,229,373)  (3,664,536)  (3,831,492)
                
Contributions  -   5,254,658   -   5,254,658 
Distributions  (624,974)  (524,571)  (1,249,545)  (1,130,556)
Offering costs  -   (593,264)  -   (593,264)
Debt Placement fees paid to General Partner  (5,738)  (3,457)  (22,200)  (12,743)
Net cash provided by (used in) financing activities
  (630,712)  4,133,366 
Net cash (used in) provided by financing activities
  (1,271,745)  3,518,095 
                
Net increase (decrease) in cash and cash equivalents  (233,105)  2,370,232 
Net (decrease) increase in cash and cash equivalents  (3,148,032)  413,999 
Cash and cash equivalents, beginning of period  7,071,792   10,722,300   7,071,792   10,722,300 
                
Cash and cash equivalents, end of period
 $
6,838,687
  $13,092,532  $
3,923,760
  $11,136,299 

see accompanying notes to condensed financial statements


NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Business

Commonwealth Income & Growth Fund V (the “Partnership”) is a limited partnership organized in the Commonwealth of Pennsylvania on May 19, 2003.  The Partnership offered for sale up to 1,250,000 units of the limited partnership at the purchase price of $20 per unit (the “Offering”).  The Partnership reached the minimum amount in escrow and commenced operations on March 14, 2005.  As of February 24, 2006, the Partnership was fully subscribed.

The Partnership usesused the proceeds of the Offering to acquire, own and lease various types of computer peripheralinformation technology (I.T.) equipment and other similar capital equipment, which will beis leased primarily to U.S. corporations and institutions.  Commonwealth Capital Corp,Corp. (“CCC”), on behalf of the Partnership and other affiliated partnerships, will acquire computer equipment subject to associated debt obligations and lease agreements and allocate a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors.

The Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of Commonwealth Capital Corp.  Commonwealth Capital Corp.CCC.  CCC is a member of the Investment Program Association (IPA), Financial Planning Association (FPA), and the Equipment Leasing and Finance Association (ELFA).  Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its computer equipment, make final distributions to partners, and to dissolve.  Unless sooner terminated, the Partnership will continue until December 31, 2015.


2. Summary of Significant Accounting Policies

Basis of Presentation

The financial information presented as of any date other than December 31, 2006 has been prepared from the books and records without audit.  Financial information as of December 31, 2006 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by accounting principles generally accepted in the United States of America.accounting principles.  In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated have been included.  For further information regarding the Partnership’s accounting policies, refer to the financial statements and related notes included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2006.  Operating results for the three month periodsix months ended March 31,June 30, 2007 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2007.

Long-Lived Assets

The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.  The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset.  If the estimated undiscounted cash flows are less than the carrying value of the asset, then an impairment exists.  The amount of the impairment is determined based on the difference between the carrying value and the fair value.  Fair value is determined based on estimated discounted cash flows to be generated by the asset.  The partnership determined that no impairment existed as of March 31,June 30, 2007.


Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years.

Net Income (Loss) Per Equivalent Limited Partnership Unit

The net income (loss) per equivalent limited partnership unit is computed based upon net income (loss) allocated to the limited partners and the weighted average number of equivalent limited partner units outstanding during the period.

3. Computer Equipment

The Partnership is the lessor of equipment under operating leases with periods ranging from 1210 to 3836 months.  In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.

Through March 31,June 30, 2007, the Partnership’s leasing operations consisted ofPartnership has only entered into operating leases.  Operating leaseLease revenue is recognized on athe monthly straight-line basis which is generally in accordance with the terms of the operating lease agreement.  Rent is recorded on a straight line basis.agreements.  The company’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.

Remarketing fees are paid to the leasing companies from which the Partnership purchases leases.  These are fees that are earned by the leasing companies when the initial terms of the lease have been met.met and the equipment is re-leased or sold.  The General Partner believes that this strategy adds value since it entices the leasing company to "stay with the lease" for potential extensions, remarketing or sale of equipment.  This strategy potentially minimizes any conflicts the leasing company may have with a potential new lease and will potentially assist in maximizing overall portfolio performance.  The remarketing fee is tied into lease performance thresholds and is factored in the negotiation of the fee.  Remarketing fees incurred in connection with lease extensions are accounted for as operating costs.  Remarketing fees incurred in connection with the sale of computer equipment are included in our gain or loss calculations.  No remarketing fees were paid for the periodsix months ended March 31,June 30, 2007.

The Partnership’s share of the computer equipment in which it participates with other partnerships at March 31,June 30, 2007 and December 31, 2006 was approximately $4,860,000$7,977,000 and $3,923,000 respectively, which is included in the Partnership’s fixed assets on its balance sheet.  The total cost of the equipment shared by the Partnership with other partnerships at March 31,June 30, 2007 and December 31, 2006 was approximately $9,684,000$15,750,000 and $8,188,000, respectively.  The Partnership’s share of the outstanding debt associated with this equipment at March 31,June 30, 2007 and December 31, 2006 was $991,000$2,138,000 and $526,000, respectively.  The total outstanding debt at March 31,June 30, 2007 and December 31, 2006 was $1,764,000$4,074,500 and $1,148,000, respectively.


The following is a schedule of future minimum rentals on noncancellable operating leases at March 31,June 30, 2007:

 
Amount
  
Amount
 
      
Nine months ending December 31, 2007 $4,735,423 
Six months ending December 31, 2007 $3,421,911 
Year ended December 31, 2008  5,539,567   6,263,077 
Year ended December 31, 2009  2,385,412   3,097,411 
Year ended December 31, 2010  152,422   204,649 
 $
12,812,824
  $
12,987,048
 

4. Related Party Transactions

Receivables/Payables

As of March 31,June 30, 2007, the Partnership’s related party receivables and payables are short term, unsecured, and non-interest bearing.

Reimbursable Expenses

The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of supplies and services obtained and used by the General Partner in connection with the administration and operation of the Partnership from third parties unaffiliated with the General Partner.  In addition, the General Partner and its affiliates are entitled to reimbursement for certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership.  During the threesix months ended March 31,June 30, 2007, the Partnership recorded $163,000$663,569 for reimbursement of expenses to the General Partner.  During the threesix months ended March 31,June 30, 2006, the Partnership recorded $75,000$379,613 for reimbursement of expenses to the General Partner.

Offering Costs

Offering costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the syndication of the Partnership’s units.  Selling commissions are 8% of the partners’ contributed capital and dealer manager fees are 2% of the partners’ contributed capital.  These costs have been deducted from partnership capital in the accompanying financial statements.

Equipment Acquisition Fee

The General Partner is entitled to be paid an equipment acquisition fee of 4% of the purchase price of each item of equipment purchased as compensation for the negotiation of the acquisition of the equipment and lease thereof or sale under a conditional sales contract.  For the periodsix months ended March 31,June 30, 2007 and 2006, equipment acquisition fees of approximately $58,000$231,300 and $95,000,$195,000, respectively, were earned by the General Partner.

Debt Placement Fee

As compensation for arranging term debt to finance the acquisition of equipment by the Partnership, the General Partner is paid a fee equal to 1% of such indebtedness; provided, however, that such fee shall be reduced to the extent the Partnership incurs such fees to third parties, unaffiliated with the General Partner or the lender, with respect to such indebtedness and no such fee will be paid with respect to borrowings from the General Partner or its affiliates.  For the periodsix months ended March 31,June 30, 2007 debt placement fees of approximately $6,000 were earned by the General Partner. For the period ended March 31,and 2006, debt placement fees of approximately $3,000$22,200 and $13,000, respectively, were earned by the General Partner.


Equipment Management Fee

The General Partner is entitled to be paid a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 5% of the gross lease revenues attributable to equipment which is subject to operating and capital leases.  For the threesix months ended March 31,June 30, 2007, and 2006 equipment management fees of approximately $69,000$156,000, and $72,000, respectively, were earned by the General Partner.

Equipment Liquidation Fee

With respect to each item of equipment sold by the General Partner (other than in connection with a conditional sales contract), a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price for such equipment is payable to the General Partner.  The payment of such fee is subordinated to the receipt by the limited partners of the net disposition proceeds from such sale in accordance with the Partnership Agreement.  Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties.  For the six months ended June 30, 2007, equipment liquidation fees of approximately $23 were earned by the General Partner.  For the threesix months ended March 31,June 30, 2006 there were no equipment managementliquidation fees of approximately $30,000 were earned by the General Partner.


5. Notes Payable

Notes payable consisted of the following:

  
March 31, 2007
  December 31, 2006 
       
Installment note payable to bank; interest at 4.61%, due in monthly installments of $160, including interest, with final payment in December 2007. $
469
  $622 
         
Installment notes payable to banks; interest ranging from 4.65% to 6.3%, due in monthly installments ranging from $1,095 to $14,239, including interest, with final payments from February through October 2008. $607,382  $714,889 
         
Installment notes payable to banks; interest ranging from 5.85% to 5.2%, due in monthly installments ranging from $8,945 to $134,671, including interest, with final payments from February through October 2009. $1,961,170  $1,604,985 
  $
2,569,021
  $2,320,496 
  
June 30,
2007
  
December 31, 2006
 
       
Installment note payable to bank; interest at 4.61%, due in monthly installments of $160, including interest, with final payment in December 2007. $314  $622 
         
Installment notes payable to banks; interest ranging from 4.65% to 6.3%, due in monthly installments ranging from $1,095 to $14,239, including interest, with final payments from February through October 2008.  498,272   714,889 
         
Installment notes payable to banks; interest ranging from 5.20% to 5.85% due in monthly installments ranging from $8,945 to $134,671, including interest, with final payments from February through October 2009.  3,005,233   1,604,985 
         
Installment note payable to bank; interest at 5.85%, due in monthly installments of $23,643, including interest, with final payment in January 2010.  240,346   - 
  $3,744,165  $2,320,496 


These notes are secured by specific computer equipment and are nonrecourse liabilities of the Partnership.  Aggregate maturities of notes payable for each of the periods subsequent to March 31,June 30, 2007 are as follows:

 
Amount
  
Amount
 
      
Nine months ending December 31, 2007 $768,177 
Six months ending December 31, 2007 $933,596 
Year ended December 31, 2008  1,243,345   1,733,518 
Year ended December 31, 2009  534,197   1,053,748 
Year ended December 31, 2010  23,302   23,303 
 $
2,569,021
  $
3,744,165
 

5. Supplemental Cash Flow Information

Other noncash activities included in the determination of net loss are as follows:

Three months Ended March 31,
 
2007
  2006 
Six months Ended June 30,
 
2007
  2006 
            
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $
325,292
  $101,734  $
796,283
  $221,744 


No interest or principal on notes payable was paid by the Partnership because direct payment was made by lessee to the bank in lieu of collection of lease income and payment of interest and principal by the Partnership.
Noncash investing and financing activities include the following:

 Three months Ended March 31, 
2007
  2006 
       
Debt assumed in connection with purchase of computer equipment $
573,817
  $345,688 
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees $
32,097
  $99,608 
11
Noncash investing and financing activities include the following:

Six months Ended June 30,
2007
2006
Debt assumed in connection with purchase of computer equipment
$2,219,952
$1,274,257
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees
$129,060
$47,459


Item 2 2:: Management’s Discussion and Analysis of Financial Condition and Results of Operations


FORWARD LOOKING STATEMENTS

Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by law, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected.


CRITICAL ACCOUNTING POLICIES

The Partnership's discussion and analysis of its financial condition and results of operations are based upon its financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Partnership believes that its critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements.

COMPUTER EQUIPMENT
 
CCC,Commonwealth Capital Corp., on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease revenue and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors. Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years.

REVENUE RECOGNITION

Through March 31,June 30, 2007, the Partnership’s leasing operations consisted ofPartnership has only entered into operating leases.  Operating leaseLease revenue is recognized on a monthly straight-line basis which is generally in accordance with the terms of the operating lease agreement.  Rent is recorded on a straight line basis. The company’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.


The Partnership reviews a customer’s credit history before extending credit and establishes a provision for uncollectible accounts receivable based upon the credit risk of specific customers, historical trends and other information.

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.  The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset.  If the estimated undiscounted cash flows are less than the carrying value of the asset, then an impairment exists.  The amount of the impairment is determined based on the difference between the carrying value and the fair value.  Fair value is determined based on estimated discounted cash flows to be generated by the asset.

Liquidity and Capital Resources

The Partnership’s primary source of capital for the quartersix months ended March 31,June 30, 2007 and March 31,was cash provided by operating activities of approximately $1,790,000.  For the six months ended June 30, 2006, werethe Partnership’s primary source of capital was from contributions of approximately $0 and $5,300,000, respectively.  The Partnership incurred and paid offering costs$5,200,000.  Equipment was purchased in the amount of approximately $0$3,560,000 during the six months ended June 30, 2007 and $593,000 during those same periods.distributions were paid in the amount of approximately $1,250,000.  Equipment in the amount of approximately $887,000$3,600,000 was purchased during the quartersix months ended March 31, 2007June 30, 2006 and distributions were paid in the amount of $625,000 were paid during that same period.  Equipment in the amount of approximately $2,000,000 was purchased during the quarter ended March 31, 2006 and distributions in the amount of $525,000 were paid during that same period.$1,100,000.

The Partnership intends to invest approximately $11,698,000$6,192,000 in additional equipment for the remainder of 2007.  The acquisition of this equipment will be funded by debt financing and the debt service will be funded from cash flows from lease rental payments.

For the quartersix months ended March 31,June 30, 2007, the Partnership generated cash was providedflows from operationsoperating activities in the amount of $1,312,000,$1,790,000, which includes a net loss of $29,000,approximately $117,000, and depreciation and amortization expenses of approximately $1,098,000.$2,470,000.  Other noncashnon-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $325,000.$796,000.

For the quartersix months ended March 31,June 30, 2006, the Partnership generated cash was providedflows from operationsoperating activities in the amount of $466,000,$727,000, which includes a net loss of $248,000,approximately $309,000, and depreciation and amortization expenses of approximately $464,000.$1,085,000.  Other noncashnon-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $102,000.$222,000.

The Partnership's investment strategy of acquiring computer equipment and generally leasing it under “triple-net leases” to operators who generally meet specified financial standards minimizes the Partnership's operating expenses.  As of March 31,June 30, 2007, the Partnership had future minimum rentals on non-cancelable operating leases of $4,735,000approximately $3,422,000 for the balance of the year ending December 31, 2007 and $8,077,000approximately $9,565,000 thereafter.  As of June 30, 2007, the outstanding debt was approximately $3,744,000 with interest rates ranging from 4.61% to 6.3%, and will be payable through January 2010.

The Partnership’s cash from operations is expected to continue to be adequate to cover all operating expenses, liabilities, and preferred distributions to Partners during the next 12-month period.  If available Cash Flow or Net Disposition Proceeds are insufficient to cover the Partnership expenses and liabilities on a short and long term basis, the Partnership will attempt to obtain additional funds by disposing of or refinancing Equipment, or by borrowing within its permissible limits.  The Partnership may, from time to time, reduce the distributions to its Partners if it deems necessary.  Since the Partnership’s leases are on a “triple-net” basis, no reserve for maintenance and repairs is deemed necessary.

The Partnership’s share of the computer equipment in which it participates with other partnerships at June 30, 2007 and December 31, 2006 was approximately $7,977,000 and $3,923,000 respectively, which is included in the Partnership’s fixed assets on its balance sheet.  The total cost of the equipment shared by the Partnership with other partnerships at June 30, 2007 and December 31, 2006 was approximately $15,750,000 and $8,188,000, respectively.  The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2007 and December 31, 2006 was $2,138,000 and $526,000, respectively.  The total outstanding debt at June 30, 2007 and December 31, 2006 was $4,074,500 and $1,148,000, respectively.

Results of Operations

Three months ended June 30, 2007 compared to Three months ended June 30, 2006

For the three months ended June 30, 2007, the Partnership recognized income of approximately $1,784,000 and expenses of approximately $1,873,000, resulting in a net loss of approximately $89,000.  For the three months ended June 30, 2006, the Partnership recognized income of approximately $880,000 and expenses of approximately $941,000, resulting in a net loss of approximately $61,000.

Lease income increased by 128% to approximately $1,737,000 for the three months ended June 30, 2007, from approximately $762,000 for the three months ended June 30, 2006.  This increase was primarily due to more lease agreements started than new lease agreements were ending during the three months ended June 30, 2007.


Results of Operations

Three months ended March 31, 2007 compared to Three months ended March 31, 2006

For the quarter ended March 31, 2007, the Partnership recognized income of approximately $1,453,000 andOperating expenses, of approximately $1,481,000, resulting in a net loss of approximately $28,000.

For the quarter ended March 31, 2006, the Partnership recognized income of approximately $654,000 and expenses of approximately $902,000, resulting in a net loss of approximately $248,000.

For the quarter ended March 31, 2007, operating expenses of $286,000, excluding depreciation, primarily consist of travel expenses of $5,000, accounting, fess of $63,000 and other LP expenses of $159,000.

For the quarter ended March 31, 2006, operating expenses of $354,000, excluding depreciation, primarily consist of sales expenses of $21,000, conferences of $11,000, postage and shipping of $5,000,legal, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership.  With the exception of legal and accounting fees, CCC has determined that in the best interest of the Partnership, the majority of approximately $168,000.

Organizational costs were approximately $0 and $37,000 forshared expenses will not be allocated to the quarter ended March 31, 2007 and  March 31, 2006, respectively.Partnership.  In accordance with the American Institute of Certified Public Accountants, Statement of Position (SOP) 98-05, costs relating to start-up activities and organization costs (accounting, legal, printing, etc.) are expensed as incurred. The expenses increased 44% to approximately $370,000 for the three months ended June 30, 2007, from $257,000 for the three months ended June 30, 2006.  This increase is primarily attributable to an increase in Partnership taxes, LP expenses and employee bonuses.

The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee increased 108% to approximately $87,000 for the three months ended June 30, 2007, from $40,000 for the three months ended June 30, 2006, which is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses increased 122% to approximately $1,374,000 for the three months ended June 30, 2007, from $620,000 for the three months ended June 30, 2006. This increase was due to the acquisition of new equipment attributable to the purchase of new leases.

Six months ended June 30, 2007 compared to Six months ended June 30, 2006

For the six months ended June 30, 2007, the Partnership recognized income of approximately $3,237,000, and expenses of approximately $3,354,000, resulting in a net loss of approximately $117,000.  For the six months ended June 30, 2006, the Partnership recognized income of approximately $1,534,000, and expenses of approximately $1,843,000, resulting in a net loss of approximately $309,000.

Lease income increased to $3,116,000 for the six months ended June 30, 2007, from $1,367,000, for the six months ended June 30, 2006, primarily due to the fact that more lease agreements were entered into since the six months ended June 30, 2006.

Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC, a related party, for administration and operation of the Partnership.  The expenses totaledincreased to approximately $1,098,000 and $464,000$656,000 for the quarterssix months ended March 31,June 30, 2007, from $612,000 for the six months ended June 30, 2006, primarily due to an increase in other LP expenses and March 31,Partnership taxes, which was set off by a decrease in legal fees, blue sky expenses and office and printing expenses.

The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee increased to approximately $156,000 for the six months ended June 30, 2007, from $72,000 for the six months ended June 30, 2006, respectively.which is consistent with the increase in lease income.

 
Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses increased to approximately $2,473,000 for the six months ended June 30, 2007; from $1,085,000 for the six months ended June 30, 2006. This increase was due to additional equipment being purchased and the associated acquisition and finance fees being recorded by the Partnership for the six months ended June 30, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership believes its exposure to market risk is not material due to the fixed interest rate of its long-term debt and its associated fixed revenue streams.

Item 4.  Controls and ProceduresProcedures

The Chief Executive Officer and Principal Financial Officer of the Partnership have conducted a review of the Partnership's disclosure controls and procedures as of March 31,June 30, 2007.

The Partnership’s disclosure controls and procedures include the Partnership's controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periodperiods specified in the Securities and Exchange Commission'sCommission’s rules and forms.  The Partnership'sPartnership’s disclosure controls and procedures also include the Partnership's controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Exchange Act is accumulated and communicated to the Partnership's management, including its Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported within the required time periods.

Based upon this review, the Partnership’s Chief Executive Officer and Principal Financial Officer have concluded that the Partnership's disclosure controls (as defined in Rule 13a-14c13a-15e promulgated under the Exchange Act) are effective to ensure that the information required to be disclosed by the Partnership in the reports it files under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to the Partnership's management, including its Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported within the required time periods.

There have been no changes in the General Partner’s internal controls or in other factors that could materially affect our disclosure controls and procedures in the quartersix months ended March 31,June 30, 2007, that have materially affected or are reasonably likely to materially affect the General Partner’s internal controls over financial reporting.

Part II:   OTHER INFORMATION

Commonwealth Income & Growth Fund V

Legal ProceedingsProceedings

N/A


Risk FactorsFactors

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC. In addition to the other information set forth in this report, youone should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may have a material adverse effect on our business, financial condition and/or operating results.


Unregistered Sales of Equity Securities and Use of ProceedsProceeds

N/A

Defaults Upon Senior SecuritiesSecurities

N/A

Submission of Matters to a Vote of Securities Holders

N/A

Other InformationInformation

N/AOn June 20th, 2007, Ms. Katrina Mason tendered her resignation, due to the impending birth of her first child. In her resignation, she stated that "she has decided to embark on the new adventure of motherhood and devote her full attention to her family." Her resignation was effective June 14, 2007. Ms. Mason tendered her resignation to Commonwealth organization and the positions she held with affiliates of the registrant and her position on the Board, as previously disclosed by the registrant in a Current Report filed with the SEC on Form 8-K.

Exhibits

31.1 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
31.2 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
32.1 SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
32.2 SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER


Item 6.
Exhibits

31.1
RULE 15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
31.2
RULE 15d-14(a) CERTIFICATION OF FINANCIAL EXECUTIVE OFFICER
32.1
SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
32.2
SECTION 1350 CERTIFICATION OF  FINANCIAL EXECUTIVE OFFICER


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 COMMONWEALTH INCOME & GROWTH FUND V
 BY: COMMONWEALTH INCOME & GROWTH FUND, INC. General Partner

August 14, 2007
May 15, 2007
By:
/s/Kimberly A. Springsteen
DateKimberly A. Springsteen
 Chief Executive Officer
 
 
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